Research On The Impact Of ESG Performance On Corporate Violation

In recent years,with the increasing public attention on ESG concepts,it has become more common for companies to disclose their ESG performance.ESG indicators evaluate companies from three aspects: environmental,social,and corporate governance.Actively practicing ESG principles and disclosing ESG performance helps companies regulate their behavior and reduce the occurrence of violations.Strict supervision of corporate violations and timely measures during the process of economic transformation towards high-quality development can provide a better market order for the participants in the capital market.Therefore,researching specific indicators that can inhibit corporate violations is of great significance in promoting financial supervision and maintaining market order.This study examines the impact of ESG performance on corporate violation among listed companies in China.Starting from the perspectives of agency theory and signaling theory,this article provides a theoretical analysis of the potential inhibitory effect of corporate ESG performance on corporate violation and proposes research hypotheses.Empirical analysis is conducted on a sample of A-share listed companies in the Shanghai and Shenzhen stock exchanges from 2018 to 2021,using the multiple regression model.As for the endogenous problems,this study uses the intersection of Confucian intensity and the average ESG score of the industry where the company is located(IV)and the air quality of the city where the company is located(IV2)as instrumental variables,using 2SLS regression to do the robustness check.The study finds a negative correlation between ESG performance and corporate violation;Institutional ownership also have a significant moderating effect on the inhibitory effect of ESG performance on corporate violation.Specifically,the inhibitory effect of ESG performance on corporate violation is more pronounced for companies with lower institutional ownership.Further research shows that non-state-owned companies,small-scale companies,and non-heavy-polluting industry companies exhibit a more significant inhibitory effect of ESG performance on corporate violation than stateowned companies,large-scale companies,and heavy-polluting industry companies,respectively.The conclusion of this article provides theoretical and empirical evidence for the study of corporate violation,improvement of the capital market ecosystem,and optimization of corporate transformation.